Choosing a higher excess amount on your insurance policy may help you save money on your premium. But what exactly is the compulsory excess on car insurance, and when does it apply?
Excess on Car Insurance
If you file a claim on your automobile insurance and your insurer authorises it, you’ll have to pay an excess. When you buy or renew your policy, this amount will be confirmed. And the money is utilised to fix or replace your vehicle.
You have simply explained, the amount you must pay out of pocket when submitting a claim with your insurance carrier is known as your vehicle insurance excess. It’s the amount you pay (or your insurance company withholds) in the case of a claim, regardless of who is to blame. It’s a set cost that you must pay at the start of any claim.
Assume you’ve crashed into another vehicle in a supermarket parking lot. The expense will be covered by your insurance provider, but you must first pay a fixed amount toward the repairs.
The insurance excess is included in almost every automobile insurance policy. Your insurer establishes a mandatory excess amount when you purchase a policy.
You can, however, choose to increase or decrease your surplus. In general, the higher your overall excess, the less expensive your premium will be. The reason for this is straightforward. If you agree to pay for any damage to your car, the amount the insurer must pay will be small. So it all comes down to creating a balance between your monthly spending and what you can afford if the worst happens. As a result, the risk you pose to an insurer is reduced. And, as with any type of insurance, the lower the risk, the cheaper the premium.
How Does Car Insurance Excess Work?
Assume you have a £150 excess on your insurance policy and are involved in an accident. The repair will cost £1,150, with your insurer covering £1,000 and you covering the £150 excess. That’s all there is to it; the bill has been paid in full.
In another case, you might have damaged your door mirror. Fortunately, all it requires is a replacement lens, which will set you back £80. Because it’s less than your £150 excess, you can’t claim it. At the very least, the maintenance costs are affordable.
The excess assures you that your insurance will be there to help you when you need it most. For example, paying for a £1,000 repair bill would have been more difficult to afford otherwise.
Types of excess
#1. Standard/Compulsory Excess car insurance
Unless otherwise specified in your insurance policy, this is the total amount you’ll pay for all claims. The basis for calculating your standard excess will depend on certain factors. They are as follows:
- Where you live
- Your car
- The insurance policy’s type, and
- Your claim history
If you file a claim, the compulsory excess on car insurance is a set sum that you must pay. This amount will be paid by your insurer. The amount varies according to the driver’s age, experience, and vehicle type. A new driver may be compelled to pay a larger compulsory excess on car insurance than a more experienced motorist since they are regarded as a higher risk. While more expensive performance cars may have a higher obligatory excess than a standard make and model, this is not always true. This isn’t always the case, however.
#2. Voluntary Excess
Because of the sort of automobile insurance you have, you may choose to pay a voluntary excess in addition to your regular excess. Choosing a higher excess can help you save money on your monthly premiums.
#3. Age Excess
If a motorist under the age of 25 was driving, using, or in charge of the car at the time of the accident, an extra excess may apply. It also applies to new drivers and is in addition to any other applicable lot. This excess will be lower if the driver’s name is on the policy than if it isn’t.
#5. Drivers History Excess
If a specified driver had their licence cancelled, suspended, disqualified, or restricted in the three years before the start of the insurance period and was driving, using, or in charge of the car at the time of the occurrence, this excess applies
Can I Change My Compulsory Excess on car insurance?
The obligatory excess is determined by your insurer. Because it’s dependent on your risk profile, you won’t be able to change it. This includes information such as your age and driving experience.
As a result, your mandatory excess is likely to be higher if you’re a novice or inexperienced driver than if you’ve been driving for a while.
The obligatory excess on your insurance is likely to be higher if you drive a valuable or high-performance vehicle, such as a sports car.
Car Insurance Voluntary Excess
This is in addition to any standard or mandatory extra. You have the option of paying a deductible that applies to all claims. In the event of a claim, your standard excess stays the same, but the voluntary excess serves as an additional payment.
In contrast to compulsory excess, voluntary excess allows you to pick the amount of extra you’re willing to spend. Increasing voluntary excess is one strategy that many people use to reduce the cost of their auto insurance.
Examine how adjusting the optional excess affects the price of auto insurance while getting a quote. Also, just choose an amount that you’re ok with.
Keep in mind, however, that if you file a claim, you might be required to pay both the voluntary and statutory excess.
How much voluntary excess should I pay?
Choosing voluntary excess, like many other insurance decisions, is all about risk perception. It’s only that this time, it’s not based on your insurer’s risk assessment. When it comes to driving, it all comes down to your degree of confidence.
The amount of voluntary excess you can add to your plan is determined by your ability to pay if you ever need to file a claim.
If you choose a higher voluntary excess, you may be able to save money on your premium. It’s a good idea to double-check that you can afford to pay both the mandatory and optional excesses on your insurance if you ever need to file a claim.
When you acquire quotes from several insurance companies, the potential insurer will ask you how much voluntary excess you want to add to your coverage. The total excess (including mandatory and voluntary) that you will be responsible for if you file a claim will be displayed in the list of quotations that result.
The amount of disposable income you have is also a factor to think about. If you’re convinced you’re unlikely to get into an accident and have enough resources to cover the costs if you do, you can benefit from a higher voluntary excess.
This is why most experienced drivers raise their voluntary excess in general. They are less likely to be in an accident, but they are also more likely to be financially secure without the help of their insurance company. Younger drivers, on the other hand, may have less discretionary cash and, as a result of their lack of driving experience, are at a higher risk of accidents. For peace of mind, paying a higher premium and skipping voluntary coverage may make sense in some cases.
When do I need to pay my voluntary excess?
Most insurers, however, will only require you to pay your excess (voluntary and mandatory) if you are at fault in a claim. For example, if you’re in an accident, you’ll have to pay your deductible before your insurance would cover the rest of the costs.
There will be no need to file a claim if the other driver confesses fault, and you will not be asked to pay any extra. Your insurance company will cover the entire cost. What makes things more difficult is when it’s unclear who is to blame. If you need to make repairs before this is determined, you’ll need to file a claim with your insurance company. You’ll have to pay the excess.
You will be compensated if the dispute is decided in your favour. If someone else makes a claim against you, your insurer will pay the claim and you will not be responsible for the excess.
Most insurers, however, will ask you to deposit your extra money upfront in order to start the claims procedure. However, this was not always the case. It may be from your total repair expenses at the conclusion of the claims process. If you do it this way, you won’t have to send them a large sum of money. You’ll only get a little portion of the cost of the repairs. In either case, you won’t be able to pay the sum in instalments. This is why you have to make sure you set aside an equal amount of your specified excess in case you need it.
How do you pay excess?
When you file a claim for damage to your automobile on your own insurance, you must pay a car insurance excess. You don’t have to pay it all at once, though.
When you file a claim, your insurer will usually deduct the excess from your compensation. That means you won’t be able to pay for your excess in instalments most of the time.
That implies you won’t have to send your insurance provider a large sum of money.
So, if you were at fault in an accident, you’d file a claim with your own insurance, not the other driver’s. And here’s how the excess would work:
If your automobile needed £2,000 in repairs and your excess was £500, your insurance company would pay £1,500 to the garage that performed the work. After that, you’d have to pay the final £500 to the garage.
That means you won’t have to pay your excess right away if you file a claim.
What happens if you can’t pay your car insurance excess?
Your excess is normally from the payout by your insurer. So you don’t have to be able to afford your surplus to the penny; all you need to do is be able to pay whatever is left over for repairs.
As an example, if you claimed £5,000 and had a £500 excess, the insurer would pay out £4,500.
You’d be £500 short if you required that £5,000 to pay for garage repairs, and you’d have to come up with a solution to cover the difference yourself.
FAQs
Is it better to have high or low excess?
Generally, a higher excess is considered a higher risk but it might save you money right now. If you’re an infrequent driver and mostly have your car safely stored then the level of risk may be low and the savings could be great.
Can I claim back my insurance excess?
If you have trouble getting your money back, you can take the insurance company or driver to court. Your insurance company has dealt with the claim, they should claim the excess back for you. If you have a no-fault accident, a credit hire company can also make a claim on your behalf.
What happens if a car accident is your fault UK?
With a car accident that’s my fault, what happens? The insurance companies involved will decide who is to blame for the crash. If you were at fault, then your insurance company will pay for the vehicle repairs. You will pay the excess on your policy.
